ESR, the largest Asia-Pacific focused logistics real estate platform, has struck a deal to acquire Ara Asset Management, the largest real assets manager in Asia Pacific, which also manages some €10 bn of assets in Europe.
The combine is set to create a group with assets under management (AUM) of $129 bn (€109 bn), making it the third largest listed real estate investment manager globally.
The acquisition agreement will see ESR buy 100% of the share capital of Ara for $5.2 bn, with a 90/10 mixture of stocks and cash. ESR's founders, along with shareholders and board members OMERS and JD.com, which together own 46% of ESR, have pledged to vote in favour of the transaction.
Founded in 2002 and listed on the SGX between 2007-2017, Ara is the largest real asset manager in APAC with one of the biggest logistics platforms in the region, known as Logos. With $95 bn in gross AUM, Ara operates a diversified multi-product platform, covering real estate investment trusts and private funds in real estate, infrastructure / renewables and credit.
Ara, which also holds a stake in Cromwell Property Group, the sponsor of Cromwell European REIT, established a joint venture with Venn Partners in 2019 to directly create and manage funds in Europe.
Jeffrey Perlman, chairman of ESR, said: 'With the acquisition of ARA, we are very excited to bring two best-in-class businesses together to form Asia Pacific's #1 real asset fund manager powered by the leading New Economy platform.
'We are currently witnessing a 'once in a generation' change in real estate where leading global investors are seeking to rebalance their portfolios by divesting institutional quality assets in order to redeploy that capital back into New Economy real estate where they have been meaningfully underweight.'
Jeffrey Shen and Stuart Gibson, ESR co-founders and co-CEOs, said: 'Post transaction, the enlarged ESR Group will witness immediate growth in size, scale and offerings – as global investors seek to give more capital to increasingly fewer managers, we are uniquely positioned to capture an outsized share of that capital. Additionally, we have always believed in the growth of logistics and data centre real estate and this transaction accelerates our vision considerably.'
John Lim, ARA co-founder and deputy chairman, said: 'For close to two decades, ARA has established itself as a leading real asset manager with a successful track record across geographies, asset classes and strategies through multiple market cycles.
'We look forward to partnering with the ESR team, whose expertise, dedication and vision have led to building the region's leading logistics real estate platform, and we can now together provide investors with a full suite of products with an outsized contribution from New Economy real estate.'
Lim, together with a representative from each of CK Asset Holdings and Sumitomo Mitsui Banking Corporation, will be appointed to ESR's board of directors.
The transaction is subject to ESR shareholders' approval at an EGM to be convened in due course, plus regulatory approvals. Closing is expected by the end of 2021 or first quarter 2022.
Morgan Stanley Asia is acting as financial advisor, and Freshfields Bruckhaus Deringer is serving as legal counsel to ESR. In addition, United Overseas Bank is providing certain debt and financing related advice to ESR on the transaction.
Citigroup Global Markets Singapore is acting as lead financial advisor to ARA, and DBS and OCBC Bank have also been appointed as financial advisors, and Latham & Watkins is serving as legal counsel to ARA.